Maynard Cooper’s Government Solutions Group Wins Reversal in One of the Most Anticipated Government Contracts Decisions in Years

Wed, December 8th 2021

On Tuesday, the United States Court of Appeals for the Federal Circuit issued its decision in Harmonia Holdings Group, LLC v. United States, No. 20-1538, a case that has garnered national attention for its potential to alter the way the United States Court of Federal Claims applies the so-called “waiver rule” first articulated in Blue & Gold Fleet, L.P. v. United States, 492 F.3d 1038 (Fed. Cir. 2007). Brad English and Emily Chancey
represented Harmonia in this case and were excited for the favorable ruling their client received.

The case involved a $325 million IT services contract issued by U.S. Customs and Border Protection. Harmonia bid on CBP’s contract. CBP twice amended its solicitation after receiving proposals, but limited the proposal changes bidders could make when responding to the amendments. Harmonia timely filed a formal pre-award agency-level protest, insisting that CBP had to allow bidders the freedom to revise their proposals as they saw fit in light of the recent amendments. The Agency denied Harmonia’s protest and awarded its contract to Dev Technology Group.

Harmonia filed a post-award protest with the United States Court of Federal Claims. In addition to a number of challenges to CBP’s evaluation and award decision, Harmonia insisted that it was unreasonable for CBP not to allow bidders to revise their entire proposals to respond to the amended solicitation. Ordinarily, the waiver rule requires challenges directed at the solicitation to be filed prior to the deadline for proposals or, in the case of post-deadline solicitation amendments, prior to award. See Blue & Gold Fleet, L.P., 492 F.3d at 1312; COMINT Systems Corp. v. United States, 700 F.3d 1377, 1382 (Fed. Cir. 2012). However, Harmonia insisted that it preserved its pre-award protest ground by filing a timely agency-level protest, just as the Federal Circuit indicated it could in Bannum, Inc. v. Unites States, 779 F.3d 1376, 1380 (Fed. Cir. 2015) (“a formal, agency-level protest before the award would likely preserve a protestor’s post-award challenge to a solicitation … as might a pre-award protest filed with the GAO”). The Court of Federal Claims disagreed, and held that Harmonia waived its pre-award protest even though it had “facially met the requirements under Blue & Gold.” In the Court of Claims’ view, Harmonia did not “diligently pursue” its pre-award ground to other protest venues after CBP denied it. Harmonia appealed.

On appeal, Harmonia argued that its pre-award agency protest preserved its challenge to CBP’s proposal revision limitation. It also explained that the Court of Claims’ “diligent pursuit” rule was designed to allow non-bidding protestors to maintain “prospective bidder” status under the Tucker Act so their protests can be heard even if they are not decided until after award. And because Harmonia actually bid on CBP’s contract, the “diligent pursuit” test played no role.

While Harmonia was in the briefing phase, the Federal Circuit issued a 2-1 decision in Inserso Corp. v. United States, 961 F.3d 1343 (Fed. Cir. 2020). The Inserso decision itself applied the waiver rule to the protestor’s claims involving information the government shared with bidders in a two-track procurement. But Judge Reyna’s dissent is what caught everyone’s eye. In Judge Reyna’s view, the Supreme Court’s 2017 decision in SCA Hygiene Products Aktiebolag v. First Quality Baby Products, LLC, 137 S. Ct. 954 (2017) invalidated the waiver rule because it prevented courts from imposing timeliness rules (like the doctrine of laches) that supplant Congressionally-enacted statutes of limitation.

The Federal Circuit held oral argument in Harmonia on November 5, 2020. Just before oral argument, the Court announced the panel that would hear the case, with Judge Reyna serving as the presiding judge on the panel. Judge Reyna’s involvement in the wake of his dissent in Inserso set up the perfect situation for the Court to roll back the waiver rule. And as the months passed after oral argument – 13 in total – many commentators presumed that the delay meant the Court planned to do exactly that. But the decision that came out Tuesday was fairly tight to its facts.

Judge Reyna wrote the Court’s opinion and held that Harmonia’s timely agency-level protest had indeed preserved its pre-award ground for resolution in the Court of Federal Claims. Of course, that is entirely consistent with the Court’s holding in Bannum. Though the Court cautioned bidders against delaying their protests, it made clear that Blue & Gold is a rule of preservation, not of preclusion. That is, protestors must take steps to preserve their pre-award grounds so that they can be heard in a post-award setting. But they are not required to litigate pre-award grounds to preclusion before award. Judge Reyna also hinted at an issue that came up during oral argument and in his Inserso dissent: that the remedy stage could be the more appropriate place for the Court of Federal Claims to address any perceived delay.

This case now goes back to the Court of Federal Claims for further proceedings.

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Please reach out to a member of Maynard Cooper’s Government Solutions Group if you have any questions or need assistance.

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